Vietnam Will Need to Reboot Its Economy after the Coronavirus

Although the Vietnamese economy has been strong in recent months, it’s preparing for a tough time in 2020, especially in light of the coronavirus that has killed hundreds across Asia. According to VN Express, a top newspaper in the region, “Authorities and businesses are scratching their heads for solutions to reboot Vietnam’s economy as the new coronavirus hurts key industries.”

That said, it’s expected to slash growth forecasts in 2020 after a relatively strong 2019. “The novel coronavirus (Covid-19) could slow Vietnam’s GDP growth from over 7 percent in 2019 to 6.09 percent this year if the disease is contained in Q2, the Ministry of Planning and Investment estimates,” as noted by the newspaper. Notably, the 7 percent growth was the highest in about a decade. 

“The epidemic’s impact on economic growth this year is very serious,” said Deputy Minister of Planning and Investment Tran Quoc Phuong at a recent meeting, according to the newspaper. 

Vietnam’s close relationship with China, which has been responsible for the initial spread of the virus, is another reason why its economy may falter in 2020. “Vietnam would suffer ‘significant impacts’ due to its open economy, long border and busy trade with China, which have already manifested through the plummeting number of tourists, disrupted supply chain, and backlogs of Vietnamese agricultural produce at Chinese border checkpoints,” according to The Star.

Most notably, the tourism industry in the country has been severely impacted due to the coronavirus. “Tourism will be the first to take a hit, with Covid-19 stripping industry revenue of between $7 and $15 billion this year, the Vietnam Tourism Advisory Board projects. The calculation is based on an anticipated drop of 90-100 percent in Chinese tourist numbers, and 50-70 percent in domestic and other markets,” according to VN Express. 

In fact, Hanoi has seen over 19,000 tourists cancel their plans to travel to the area as a result of fears related to the virus. “It will take a long time for the industry to recover when the disease finally drops in severity,” said Vietnam National Administration of Tourism Director Nguyen Trung Khanh, according to the newspaper. 

Additionally, the travel industry has been hurt significantly due to the coronavirus. “The epidemic has resulted in 640 flights a week between the two countries being canceled, or a loss of 400,000 passengers a month, according to the Civil Aviation Authority of Vietnam,” as noted by the publication.